Established New Growth Opportunity inthe United Stateswith Acquisition of Hemp-Based Products Platform

TORONTO,Aug. 08, 2019(GLOBE NEWSWIRE) — Cronos Group Inc.(NASDAQ: CRON) (TSX: CRON) (“Cronos Group” or the “Company”), today announced financial results and business highlights for the second quarter and first-half endedJune 30, 2019.

“During the second quarter,Cronos Groupexpanded its R&D capabilities, innovation expertise and global infrastructure network in what has been a year of tremendous growth,” saidMike Gorenstein, CEO ofCronos Group. “We openedCronos Device Labs, our new global R&D center inIsrael, announced the acquisition of our new state-of-the-art fermentation facility and added Dr.Todd Abrahamas Chief Innovation Officer to our executive leadership team.”

{{cta(‘90438494-6bd0-4c05-aee6-ee36a536f0d4′,’justifycenter’)}}

“We also took steps to enter the U.S. market with our recent acquisition of Redwood Holding’s hemp-based CBD platform. As we look ahead, we will continue to capitalize on this momentum by building on our partnerships with Altria and Gingko Bioworks and leveraging our collective resources and expertise to realize the significant potential in the growing cannabis industry.”

Financial Results Second Quarter 2019

($ in 000s, except where noted otherwise)

Three Months Ended

Six Months Ended

June 30,

Change

June 30,

Change

2019

2018

$

%

2019

2018

$

%

Financial Results

Net Revenue

$10,237

$3,394

$6,843

202%

$16,707

$6,339

$10,368

164%

Gross Margin before Fair Value Adjustments

53%

63%

—

—

54%

55%

—

—

Adjusted EBITDA(1)

$

(17,772)

$

(2,396)

$

(15,376)

642%

$

(26,719)

$

(3,896)

$

(22,823)

586%

Extract Sales (% of Net Product Revenue)

20%

19%

—

—

21%

14%

—

—

Operating Results

Kilograms Sold

1,584

477

1,107

232%

2,695

978

1,717

176%

Net Product Revenue / Gram Sold

$

6.44

$

7.03

$

(0.59)

(8%)

$

6.15

$

6.37

$

(0.22)

(3%)

Cost of Sales before Fair Value Adj. / Gram Sold

3.01

2.63

0.38

14%

2.87

2.88

(0.01)

(0%)

Balance Sheet(2)

Cash and Cash Equivalents

$

1,579,231

$

89,609

$

1,489,622

1,662%

$

1,579,231

$

89,609

$

1,489,622

1,662%

Short-Term Investments

744,936

—

744,936

NA

744,936

—

744,936

NA

Derivative Liabilities

1,399,594

—

1,399,594

NA

1,399,594

—

1,399,594

NA

(1) See“General Matters – Non-IFRS Measures”for information related to Adjusted EBITDA. (2) Dollar amounts are as of the last day of the period indicated.

1,584 kilograms were sold in Q2 2019, representing a 232% increase from 477 kilograms sold in Q2 2018, primarily driven by increased cannabis production and the launch of the adult-use market inCanada. Kilograms sold increased 43% quarter-over-quarter from 1,111 kilograms sold in the first quarter of 2019, primarily driven by increased cannabis production.

Cost of sales before fair value adjustments per gram sold was$3.01in Q2 2019, representing a 14% increase from$2.63in Q2 2018 and a 12% increase from$2.69in the first quarter of 2019. The increase quarter-over-quarter was driven by higher processing cost on a per gram basis.

The Company experienced continued growth in cannabis oil sales, which represented 20% of net product revenue in Q2 2019 compared to 19% in Q2 2018.

($ in 000s, except where noted otherwise)

Second

First

Quarter

Quarter

Change

2019

2019

$

%

Financial Results

Net Revenue

$

10,237

$

6,470

$

3,767

58%

Gross Margin before Fair Value Adjustments

53%

54%

—

—

Adjusted EBITDA(1)

$

(17,772)

$

(8,947)

$

(8,825)

99%

Extract Sales (% of Net Product Revenue)

20%

23%

—

—

Operating Results

Kilograms Sold

1,584

1,111

473

43%

Net Product Revenue / Gram Sold

$

6.44

$

5.73

$

0.71

12%

Cost of Sales before Fair Value Adj. / Gram Sold

3.01

2.69

0.32

12%

Balance Sheet(2)

Cash and Cash Equivalents

$

1,579,231

$

2,418,277

$

(839,046)

(35%)

Short-Term Investment

744,936

—

744,936

NA

Derivative Liabilities

1,399,594

1,664,275

(264,681)

(16%)

(1) See“General Matters – Non-IFRS Measures”for information related to Adjusted EBITDA. (2) Dollar amounts are as of the last day of the period indicated.

Business Highlights

Global Supply Chain

Cronos Groupis transitioning its current production footprint towards an efficient global supply chain model, which is expected to employ a combination of wholly-owned production facilities, third-party suppliers and global production partnerships, all of which is anticipated to support the manufacturing of the Company’s adult consumer goods. The Company remains focused on establishing industry-leading methodologies and best practices at Peace Naturals, the Company’s center of excellence, and leveraging expertise to create high quality domestic and international products that resonate with consumers.

InJuly 2019, subsequent to the end of the second quarter, the Company entered into a contract manufacturing agreement with Heritage Cannabis Holdings Corp. (“Heritage”), a cannabis producer based inBritish Columbia. Heritage will be providing cannabis extract and services related to the filling and packaging of vaporizer devices for the Canadian cannabis adult-use and medical markets. The agreement has a two-year term with an option to extend upon agreement by both parties, at an annual potential contract value of$35 million, based on current projections.

Global Sales and Distribution

Cronos Groupremains committed to leading the industry forward responsibly as derivative products are introduced to the Canadian marketplace this fall. Along with Cronos Group’s internal capabilities, the Company has partnered with third-party producers to support the Company’s entry into the vaporizer category inCanada. Both aforementioned third-party suppliers are expected to utilize the Company’s proprietary formulations for production.

Intellectual Property Initiatives

InMay 2019,Cronos GroupestablishedCronos Device Labs, a global research and development (“R&D”) center for vaporizer innovation. Cronos Device Labs’ advanced facility is based inIsrael, a leader in cannabis R&D, and supports Cronos Group’s efforts to develop next-generation vaporizer products that are designed specifically for cannabinoid applications.

Cronos Device Labs, which is equipped with an experienced team of product development talent, advanced vaporizer technology and analytical testing infrastructure, serves as the global center of R&D for the Company’s vaporizer devices.

The 23-member team atCronos Device Labs, which brings toCronos Groupover 80 years of combined expertise in vaporizer development, is comprised of product designers, mechanical, electrical and software engineers, and analytical and formulation scientists.Cronos Device Labssignificantly enhances Cronos Group’s technology and development capabilities and is expected to enable the Company to deliver expanded product offerings to customers that are specially tailored to cannabinoid use.

Subsequent to the end of the second quarter,Cronos Groupclosed the previously announced acquisition of an 84,000 square foot GMP compliant fermentation and manufacturing facility inWinnipeg, ManitobafromApotex Fermentation Inc.(“AFI”) onJuly 31, 2019. The state-of-the-art facility, which will operate as “Cronos Fermentation”, includes fully equipped laboratories covering microbiology, organic and analytical chemistry, quality control and method development as well as two large scale microbial fermentation production areas with a combined production capacity of 102,000L, three downstream processing plants, and bulk product and packaging capabilities.

The acquisition was funded using existing cash on hand and is expected to provide the fermentation and manufacturing capabilities the Company needs in order to capitalize on the progress underway withGinkgo Bioworks, Inc.(“Ginkgo Bioworks”). TheGinkgo Bioworkspartnership aims to bring innovation and biological manufacturing to the cannabis industry, which would allow for cannabinoid production at large scale and with greater efficiency compared to traditional cultivation and extraction. Commercial production at the facility is subject to completion of the equipment alignment for cannabinoid-based production, the receipt of the appropriate licenses fromHealth Canadato produce cultured cannabinoids under theCannabis Act(Canada) and the achievement of certain milestones under the strategic partnership withGinkgo Bioworks.

Brand Portfolio

Subsequent to the end of the second quarter,Cronos Groupentered into a definitive agreement to acquire four ofRedwood Holding Group, LLC’s operating subsidiaries (collectively, “Redwood”). Redwood manufactures, markets and distributes hemp-derived CBD infused skincare and other consumer products online and through retail and hospitality partner channels inthe United Statesunder the Lord Jones™ brand. Redwood’s products use pure hemp oil that contains natural phytocannabinoids and terpenes found in the plant.

Under the terms of the agreement,Cronos Groupwill acquire Redwood for approximatelyUS$300 million, net of Redwood’s estimated cash and debt and subject to a customary working capital adjustment.US$225 millionof the total consideration (subject to the foregoing adjustments) will be paid in cash with the balance paid in newly issuedCronos Groupcommon shares.Cronos Groupwill fund the cash portion of the transaction with cash on hand. The acquisition is expected to close in the third quarter of 2019, subject to customary closing conditions and regulatory approvals.

Conference Call

The Company will host a conference call and live audio webcast onThursday, August 8, 2019at8:30 a.m. ESTto discuss second quarter 2019 results. The call will last approximately one hour. Instructions for the conference call are provided below:

An audio replay of the call will be archived on the Company’s website for replay.

AboutCronos Group

Cronos Groupis an innovative global cannabinoid company with international production and distribution across five continents. Cronos Group is committed to building disruptive intellectual property by advancing cannabis research, technology and product development. With a passion to responsibly elevate the consumer experience,Cronos Groupis building an iconic brand portfolio. Cronos Group’s portfolio includes PEACE NATURALS™, a global health and wellness platform, and two adult-use brands COVE™ and Spinach™. To learn more aboutCronos Groupand its brands, please visit:

Forward-looking statementsThis press release contains “forward-looking information” and “forward-looking statements” within the meaning of applicable securities laws (collectively, “forward-looking statements”), which are based on the Company’s current internal expectations, estimates, projections, assumptions and beliefs. All information contained herein that is not clearly historical in nature may constitute forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “likely”, “should”, “would”, “plan”, “anticipate”, “intend”, “potential”, “proposed”, “estimate”, “believe”, or other similar words, expressions, phrases, including negative and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussions of strategy. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of historical fact. Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as at and for periods ended on certain dates and to present information about management’s current expectations and plans relating to the future and the reader is cautioned that such information may not be appropriate for any other purpose. Some of the forward-looking statements contained in this press release, include, but are not limited to, statements with respect to: the anticipated benefits of our joint ventures, strategic alliances, research and development initiatives, acquisitions and other commercial arrangements, including the ability to produce and distribute the target cannabinoids under our strategic partnership withGinkgo Bioworks, Inc., the ability to build innovative vaporizer products and expand product offerings throughCronos Device Labsand the ability to further create and scale hemp-derived consumer products through the Company’s acquisition of Redwood; expectations regarding the Company’s acquisition of Redwood, including anticipated timing of closing of the acquisition and the anticipated benefits therefrom; our ability to execute on our growth strategy, including the construction of production facilities and the commencement of operations by our joint ventures and the timing thereof; the ability ofCronos Group, our joint ventures, strategic partners and commercial counterparties to obtain all necessary licenses, permits and approvals; our ability to expand our distribution network and global footprint; our business and operations; our strategy for future growth; our intention to build an international iconic brand portfolio and develop disruptive intellectual property; and the growth potential of the cannabis industry and our ability to realize such opportunity. No forward-looking statement can be guaranteed andCronos Groupcannot guarantee the forward-looking statements contained herein. Forward-looking statements are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management’s perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances. While we consider these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct. By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release. Such factors include, without limitation, those discussed in the Company’s most recent management’s discussion and analysis and the Company’s annual information form for the year endedDecember 31, 2018, both of which have been filed on the Company’s profile on SEDAR atwww.sedar.comand on EDGAR atwww.sec.gov. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and are based on the beliefs, estimates, expectations and opinions of management on the date such forward-looking statements are made. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by applicable law.

All references in this press release to “dollars”, “C$” or “$” are to Canadian dollars and all references to “US$” are toUnited Statesdollars.

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements

Cronos Group Inc.Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Income (Loss)For the three and six months ended June30, 2019 and June30, 2018(in thousands of CDN $, except share and per share amounts)

ThreeMonthsEndedJune30,

Six Months EndedJune30,

Notes

2019

2018

2019

2018

Gross revenue

16

$

10,787

$

3,394

$

17,772

$

6,339

Excise taxes

(550)

–

(1,065)

–

Net revenue

10,237

3,394

16,707

6,339

Cost of sales

Cost of sales before fair value adjustments

4,762

1,254

7,746

2,821

Gross profit before fair value adjustments

5,475

2,140

8,961

3,518

Fair value adjustments

Unrealized change in fair value of biological assets

4

(4,024)

(6,831)

(17,577)

(9,575)

Realized fair value adjustments on inventory sold in the period

3,557

2,625

7,279

4,819

Total fair value adjustments

(467)

(4,206)

(10,298)

(4,756)

Gross profit

5,942

6,346

19,259

8,274

Operating expenses

Sales and marketing

5,358

364

6,858

950

Research and development

3,076

–

4,633

–

General and administrative

15,176

4,219

24,787

6,680

Share-based payments

15(b)

2,002

950

2,739

1,724

Depreciation and amortization

8,9,11

675

323

1,145

608

Total operating expenses

26,287

5,856

40,162

9,962

Operating loss

(20,345)

490

(20,903)

(1,688)

Other income (expense)

Interest income (expense)

12,531

(37)

15,251

(59)

Financing and transaction costs

12,13,25

(4,505)

–

(34,066)

–

Gain on revaluation of derivative liabilities

13

263,943

–

700,326

–

Share of (loss) income from investments in equity accounted investees

5

(991)

3

(1,255)

44

Gain on disposal of Whistler

5

–

–

20,606

–

Gain on other investments

6

–

–

924

221

Total other income

270,978

(34)

701,786

206

Income (loss) before income taxes

250,633

456

680,883

(1,482)

Deferred income tax (recovery) expense

20

(335)

(267)

2,222

(1,155)

Net income (loss)

$

250,968

$

723

$

678,661

$

(327)

Net income (loss) attributable to:

Cronos Group

$

251,117

$

723

$

678,946

$

(327)

Non-controlling interests

10

(149)

–

(285)

–

$

250,968

$

723

$

678,661

$

(327)

Other comprehensive income (loss)

Gain on revaluation and disposal of other investments, net of tax

6,20

$

–

$

39

$

103

$

4

Foreign exchange loss on translation of foreign operations

2(a),10

(104)

–

(87)

–

Total other comprehensive income (loss)

(104)

39

16

4

Comprehensive income (loss)

$

250,864

$

762

$

678,677

$

(323)

Comprehensive income (loss) attributable to:

Cronos Group

$

251,011

$

762

$

678,960

$

(323)

Non-controlling interests

10

(147)

–

(283)

–

$

250,864

$

762

$

678,677

$

(323)

Earnings (loss) per share

Basic

17

$

0.75

$

0.00

$

2.14

$

(0.00)

Diluted

17

$

0.22

$

0.00

$

0.58

$

(0.00)

Weighted average number of outstanding shares

Basic

17

334,665,873

175,529,196

317,940,749

166,343,078

Diluted

17

374,676,595

211,524,230

364,872,093

166,343,078

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements

Non-IFRS Measures

The Company uses certain measures that are not recognized under International Financial Reporting Standards (“IFRS”), do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. Rather, these measures are provided as a supplement to those IFRS measures to provide additional information regarding the Company’s results of operations from management’s perspective. Accordingly, non-IFRS measures should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS. Each non-IFRS measure is reconciled to its most directly comparable IFRS measure.

Adjusted EBITAdjusted earnings before interest and tax (“Adjusted EBIT”) is used by management as a supplemental measure to review and assess operating performance and trends on a comparable basis. Adjusted EBIT is defined as net income or loss, excluding interest expense, interest income, deferred income tax expense or recovery, share-based payments, unrealized change in the fair value of biological assets, realized fair value adjustments on inventory sold, financing costs, gain on revaluation of derivative liabilities, share of income or loss from investments in equity accounted investees and gain or loss on investments. The Company believes that Adjusted EBIT is useful to compare its operating profitability across periods.

Adjusted EBITDAAdjusted earnings before interest, tax, depreciation and amortization (“Adjusted EBITDA”) is used by management as a supplemental measure to review and assess operating performance and trends on a comparable basis. Adjusted EBITDA is defined as Adjusted EBIT excluding depreciation and amortization. The Company believes that Adjusted EBITDA is useful to compare its ability to generate cash from operations across periods.

Reconciliation of non-IFRS measuresA reconciliation of Adjusted EBIT and Adjusted EBITDA to net income, the most directly comparable IFRS measure, is presented in the following table.

KushCo Holdings, Inc. Reconfirms Fiscal 2019 Revenue Guidance

Risk of Prosecution for Marijuana-Related Companies. If you are considering investing in a company that is connected to the marijuana industry, be aware that marijuana-related companies may be at risk of federal, and perhaps state, criminal prosecution. The Department of Treasury recently issued guidance noting: “[T]he Controlled Substances Act (“CSA”) makes it illegal under federal law to manufacture, distribute, or dispense marijuana. Many states impose and enforce similar prohibitions. Notwithstanding the federal ban, as of the date of this guidance, 20 states and the District of Columbia have legalized certain marijuana-related activity.”